Hi,

I entered the US on an F-1 in July 2006, and was resident in India prior to that. Previously, I had visited briefly in Feb 2006 on a B-1/B-2 visa. While using the Cintax software to calculate my returns for 2006, it does not deduct the standard deduction for 2006 ($5,150) for me, though it does allow me the personal exemption of $3,300 on the 1040NR-EZ form. Is there a reason for this?

Am I eligible for the standard deduction allowed under Art 21(2) of the US-India tax treaty? Or does my previous visit on the B-1/B-2 affect the application of this treaty to my tax-return in any way?

Is this treaty valid for more than 2 years? I will be in the US as a student for 5 years. If I obtain the standard deduction under this treaty for the first 2 years, will I have to pay it back retroactively in the third year?

I will really appreciate any help with this matter.

Thanks
Ketki

You have to add the standard deduction into the form manually. SOftware does not think; you have to do that.

Yes, you ARE eligible for the $5,150 standard deduction.

You file as a non-resident alien for FIVE years. Starting in the sixth year, you become a resident alien and pay taxes like a U.S. citizen.

Thank you very much Atlanta Tax Expert, I really appreciate your help.

When I file as a non-resident for 5 years, does it mean that I can apply the treaty to my returns for five years, and not have to pay back the standard deduction retroactively if I stay a 6th year?

There is NO retroactive repayment of the standard deduction.